Luoyang outlines plan to create global glass giant
H share Luoyang Glass hopes the four big state-owned asset management companies (AMC) will consolidate their equity holdings in various manufacturers to create one of the world's biggest float glass makers.
The proposal promised to help ease the glass glut and tap economies of scale, said chairman Guo Xiaohuan.
He hoped the resulting group would co-ordinate procurement and marketing activities around the country.
He planned to initiate a meeting during the second half of the year with the AMCs to discuss the idea.
'I think this is a step that has to be taken. Without it, the domestic industry may continue to engage in disorderly competition,' Mr Guo said.
Beijing created the four AMCs in 1999 to clean up non-performing debts at the four big state-owned commercial banks - the Bank of China, China Construction Bank, Industrial & Commercial Bank of China and the Agriculture Bank of China.
Mr Guo said the AMCs together had about 20 per cent of the shares in China Luoyang Float Glass Group, Luoyang Glass's parent.
They acquired the stakes when the State Council authorised debt to equity swaps for 270 million yuan (about HK$252.99 million) worth of debt the group owed to the banks.
Similar swaps have seen the AMC with holdings in more than 10 domestic float glass makers.
Between them these companies had about 23 of the 69 domestic float glass production lines, including Luoyang Glass's seven, Mr Guo said.
He explained that there were more than 40 float glass makers - most controlled by the state. That compared with three in Europe and six in the United States.
Luoyang Glass yesterday posted net profit of 65 million yuan for the year to December 31 - a 26.55 per cent year-on-year lift .
It was achieved on turnover which rose 9.66 per cent to 901.5 million yuan.
Last year Luoyang Glass succeeded in cutting costs by 8 per cent while its average product price rose 10 per cent.
However, pressure from new unauthorised production facilities in December resulted in a significant slowing of profit and turnover growth.
'There could be another price war this year,' Mr Guo warned.